Posted in: Economy

The Whoosh debt debacle: what the need for speed will cost Indonesia

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Intended to symbolise Indonesian national pride when it began operations in October 2023, Whoosh has a speed of 350 kilometres per hour and a massive price tag of over US$7 billion, funded by Chinese state-owned finance providers. Indonesia’s Whoosh debt now amounts to US$5.4 billion (75 percent of total project costs), triggering criticism across the country and a corruption investigation.

Prabowo’s first year: unconsolidated state-led capitalism?

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Prabowo’s expanded role of the military in national development mirrors earlier experiments with economic nationalism under Sukarno’s ‘guided democracy’ and Soeharto’s military-backed corporatism.

Indonesian consumers are paying the price of the government’s market distortions. It needs to stop.

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The government’s quick fix was to suggest that private retailers buy their fuel supplies from Pertamina, the state-owned fuel giant. On the surface, this looked like a reasonable rescue measure. But, in reality, it suggests a more sinister agenda:  bolstering the government’s monopoly over fuel.

New Indonesian finance minister wants to inject more money to revive growth. Will it work?

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Purbaya Yudhi Sadewa, the plain-speaking senior economist who was recently appointed Indonesia’s new finance minister, can’t be more different to Sri Mulyani, his reformist predecessor who led the country’s fiscal policymaking for more than a decade.

Signed, sealed, misunderstood: Indonesia’s blind leap into the US trade deal

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What to make of the Indonesia-US deal now that final tariff rates for other countries have started to take shape? Did Prabowo blink too soon? And more importantly, did Prabowo’s administration carefully calculate the scale and implications of the US demands that accompanied the ‘lower’ tariff rate?

Can Indonesia navigate global economic turbulence under Prabowo?

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Despite having a small overall trade exposure to the US and a modest portion of exports in its output, Indonesia’s financial market is among the hardest hit by the threat that Trump’s protectionism poses to the world economy. This reveals a much deeper problem within the Indonesian economy. Investors are growing uneasy not just due to global uncertainty, but also because the Prabowo administration's policy choices are straying away from macro and fiscal prudence, a principle that has supported Indonesia's stable growth for the past two decades.

Danantara: a new hope or a phantom menace?

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The establishment of Danantara, Indonesia’s new sovereign wealth fund (SWF), has sparked both optimism and scepticism.

Danantara: It’s the politics, stupid!

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For many observers, Danantara potentially reproduces Indonesia’s predatory political economy. On this view, SOEs embody rising economic nationalism, that is state capitalism, and crowd out capital formation by private firms. Yet, digging into its board structure, it is apparent that Danantara instead reflects combined forms of capitalism – private fossil-fuel and tech, as well as state capital – that have overall benefited from Indonesia’s oligarchic politics, as well sustaining its high costs.

Why Prabowo’s misguided ‘austerity’ is emblematic of his free-wheeling economic policy    

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The Prabowo Subianto administration begins 2025 with a massive Rp 306 trillion fiscal spending cut, representing over 8% of this year’s state budget, delivered by Presidential instruction 1/2025.

Indonesia at Melbourne is supported by:

Melbourne Law School Asia Institute Centre for Indonesian Law, Islam and Society Indonesia Forum Faculty of Arts Indonesia Democracy Hallmark Research Initiative

Indonesia at Melbourne

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Date created: 1 July 2015

Editor: Ary Hermawan

Editorial board: 
Professor Tim Lindsey
Dr Tim Mann
Aron Corbett

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